Tax Return:: Are All Government Payments and Allowances Taxable Income?

Hello, this is your tax and super specialist, P&C Tax Professionals.

There are certain Australian Government payments, pensions or allowances which you must declare on your tax return including those tax-free payments and allowances which are not taxed but which still needs to be reported to the ATO.

The majority of these Government payments will automatically be pre-filled into your tax return when you lodge your return online. Please ensure that you check your pre-fill information with your own records which you have on hand and add any additional information as needed.

<Taxable pensions, payments and allowances>

If you have received any of the following payments from the Australian Government, you must declare them on your tax return. Please keep in mind that the below list is not in any way exhaustive.

> the age pension

> carer payment

> Austudy payment

> JobSeeker payment

> Youth allowance

> Defence Force income support allowance (DFISA)

> veteran payment

> invalidity service pension (applicable to those who have reached age-pension age)

> disability support pension (applicable to those who have reached age-pension age)

> income support supplement

> sickness allowance

> parenting payment (partnered)

> disaster recovery allowance (excluding any allowance received for the 2019-20 bushfires)

Such payments you have received during the financial year will count towards your total taxable income for the given financial year.

<Tax-free government pensions or benefits>

There exist certain Australian Government payments that are tax-free but which you are still required to declare in your tax return.

Tax-free Australian Government pensions or benefits consists of:

> carer payment where:

- both the carer and the care receiver are under the age-pension age, OR

- the carer is under the age-pension age and the care receiver has passed away.

> disability support pension that is paid by Centrelink for those of you who are under age-pension age.

> invalidity service pension for veterans under the age-pension age.

> partner service pension where:

- both the partner and the veteran are under the age-pension age and the veteran is currently receiving an invalidity service pension, OR

- the partner is under the age-pension age while the veteran has passed away and at the time of death, was a recipient of the invalidity service pension.

<COVID-19 Disaster Payments>

The COVID-19 disaster payments are issued to support those individuals who cannot earn income due to the state or territory health orders which have restricted people from attending their usual workplace.

According to the ATO, the COVID-19 disaster payment has been reclassified as a non-assessable non-exempt (NANE) income.

This implies that:

> it is a non-taxable payment (i.e., it won’t form a part of your taxable income)

> you are not required to include it in your tax return.

<Pandemic Leave Disaster Payment>

The pandemic leave disaster payment is issued to support individuals located in certain states that cannot earn an income due to:

> having to self-isolate or quarantine at home

> having to take care of someone with COVID-19.

These payments are considered assessable income. Which means that you would need to report this type of income in your tax return in the same income year in which you received the payments.

<JobKeeper>

All JobKeeper payments are indeed assessable as ordinary income for all businesses that were eligible to receive these payments.

For employees:

> If you have received JobKeeper as part of your wage, the amount of JobKeeper payment you have received will be identified as ‘Salary or wages’ or an allowance or top up on your income statement or payment summary.

It is always important to keep on track of all the payments you receive from the Government as you may or may not need to declare them on your next tax return.

If you have any further questions or enquiries in regards to your tax return or super, you can reach out to us through our Official Facebook Page (P&C Tax Professionals – Australia) or by using our email address at pnctax@naver.com.

Thank you and bye for now!